Makes a great headline, but that's all. 40% in 5 years is the result of compounding growth at only 7%pa. The average over the last 10 years resulted in a compounding rate of equal to just under 10%pa. The headline could have equally read 'long term house price growth to drop 30%' (i.e. 3%/10%); 100% accurate with a completely different emotion. It must have been a slow news day.
Dave

This is a general comment, opinion or view on experience and does not constitute advice. Spelling and grammatical errors included to add character and originality!

Makes a great headline, but that's all. 40% in 5 years is the result of compounding growth at only 7%pa.

Click to expand...

Since interest rates are above 7 per cent then capital gains won't even cover the interest you pay. 40% in 5 years is too low.

But property is heterogenous. E.g. the 25% increase in median house price in Melbourne recently disguised the fact that rich inner-city houses went up about 50% while the poor outer-suburb houses achieved 3-9%

When you average it out you get 25% but that doesn't mean any house will get that.

If you can select the right house, you'll be fine. Of course, if you have the ability to always pick the right house or company, then you should be a fund manager making billions in performance fees.

We'll see how tight lending is over the next month or so. We are organising a valuation on our unit, so we can get a LOC equal to the equity. The we will try to get a loan for unit valued between 250-280k in Hobart (probably closer to 280K) and rent that out. We know there is rental demand here. It will be very interesting to see how that demand effects the rental amount people will pay.

Anything I say is opinion (probably based on faulty logic, wrong assumptions or lack of information) and should not be relied upon. Please seek your own due diligence on anything that I may discuss.

In Perth I believe that there are now about 16,000 properties on the market as opposed to the usual 12,000 in a 'normal market' (whatever that is) and 19,119 homes were listed for sale in four week period early this year (10,643 over the same period last year).

Real Estate agents are talking about "correct pricing" for Home sales; Land & H&L packages are offering all kinds of incentives for purchases as most everyone sits on the sidelines watching what happens

Interest rate rises, houses being passed in at auction,Homes sales stalling, FHO waiting to see whats next

In the meantime rents and population growth still rise

Over the next 5 Years I'm sure some Huge Fortunes will be made

The above is my opinion only; Please do your due dilligence.......after all; I am still learning !